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Forum Post: Matt Taibbi, The Scam Wall Street Learned From the Mafia, classic cartel activity: not just one corrupt bank, but many,

Posted 1 year ago on June 22, 2012, 8:48 p.m. EST by Middleaged (5140)
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The Scam Wall Street Learned From the Mafia, 21 June, 2012, by Matt Taibbi, Rollingstone Magazine (Below is just selected text, go to website as the story is rather long) How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape

http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620

.....But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.

USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordi­nated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.

More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world's most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies.

But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America's gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show.

Read more: http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620#ixzz1yZZGV9OG

32 Comments

32 Comments


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[-] 4 points by enough (589) 1 year ago

Matt Tiabbi is a one-man army. He fearlessly reveals the corruption of Wall Street bankers and their government lackeys 24/7 while the cowards in the main stream media chronically fail to expose the unvarnished truth. Very few pundits or so-called analysts challenge Tiabbi's findings because that would take too much effort and would rub their establishment bosses the wrong way. They hope most Americans will regard Taibbi's investigatory reports and analyses as tabloid journalism since he works for Rolling Stone. Instead, Taibbi makes them look like a bunch of cub reporters.

[-] 2 points by Middleaged (5140) 1 year ago

True. I wish I could do half of what Matt Taibbi can and does do.

[-] 1 points by shadz66 (18001) 1 year ago

I'd settle for 0.1% of what Taibbi does !! Further to your important 'forum-post', I append :

Moyers, Matt Taibbi and Yves Smith discuss the folly and corruption of both banks and government. Also, Peter Edelman on fighting U.S. poverty.

JPMorgan Chase CEO Jamie Dimon’s appearances in the last two weeks before Congressional committees — many members of which received campaign contributions from the megabank — beg the question : For how long and how many ways are average Americans going to pay the price for big bank hubris, with our own government acting as accomplice ?

Rolling Stone editor Matt Taibbi and Yves Smith, creator of the finance and economics blog "Naked Capitalism" ( http://www.nakedcapitalism.com/ ), join Bill to discuss the folly and corruption of both banks and government, and how that tag-team leaves deep wounds in our democracy. Taibbi’s latest piece is “The Scam Wall Street Learned from the Mafia.” Smith is the author of "ECONned : How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism."

Meanwhile, for anyone who wants to understand why, in one of the richest nations in the world, so many poor people are teetering on the edge, author and advocate Peter Edelman talks about continuing efforts to fight poverty, and what it will take to keep the needs of poor people on the American political agenda. A former aide to Robert F. Kennedy and faculty director of Georgetown University’s Center on Poverty, Inequality, and Public Policy, Edelman’s new book is "So Rich, So Poor : Why It’s So Hard to End Poverty in America".

radix malorum est cupiditas ...

[-] 2 points by PublicCurrency (1387) 1 year ago

Wall Street Confidence Trick: How Interest Rate Swaps Are Bankrupting Local Governments

Far from reducing risk, derivatives increase risk, often with catastrophic results.

Derivatives expert Satyajit Das, Extreme Money (2011)

The “toxic culture of greed” on Wall Street was highlighted again last week, when Greg Smith went public with his resignation from Goldman Sachs in a scathing oped published in the New York Times. In other recent eyebrow-raisers, LIBOR rates—the benchmark interest rates involved in interest rate swaps—were shown to be manipulated by the banks that would have to pay up; and the objectivity of the ISDA (International Swaps and Derivatives Association) was called into question, when a 50% haircut for creditors was not declared a “default” requiring counterparties to pay on credit default swaps on Greek sovereign debt.

Interest rate swaps are less often in the news than credit default swaps, but they are far more important in terms of revenue, composing fully 82% of the derivatives trade. In February, JP Morgan Chase revealed that it had cleared $1.4 billion in revenue on trading interest rate swaps in 2011, making them one of the bank’s biggest sources of profit. According to the Bank for International Settlements:

[I]nterest rate swaps are the largest component of the global OTC derivative market. The notional amount outstanding as of June 2009 in OTC interest rate swaps was $342 trillion, up from $310 trillion in Dec 2007. The gross market value was $13.9 trillion in June 2009, up from $6.2 trillion in Dec 2007.

For more than a decade, banks and insurance companies convinced local governments, hospitals, universities and other non-profits that interest rate swaps would lower interest rates on bonds sold for public projects such as roads, bridges and schools. The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels. This was not a flood, earthquake, or other insurable risk due to environmental unknowns or “acts of God.” It was a deliberate, manipulated move by the Fed, acting to save the banks from their own folly in precipitating the credit crisis of 2008. The banks got in trouble, and the Federal Reserve and federal government rushed in to bail them out, rewarding them for their misdeeds at the expense of the taxpayers.

Read more

www.webofdebt.com/articles/interestrateswap.php

[-] 2 points by Middleaged (5140) 1 year ago

Bill Still is suggesting that ending money creation and control by Private banks and ending the borrowning of the US Government from Private banks could be a 'New Civil Rights Movement' - if we make it a 'battlecry' or make it the prime issue. (approx 1:46 minutes into the video)

Money Masters Revised video The Secret of OZ by Bill Still is only 1 56 minutes long and worth 3 or more viewings. I actually liked the 3 hour original better the first time I saw the new revised version (shorter version).

I ended up listening to it again as I wrote and did a few things around the house.

http://www.youtube.com/watch?v=swkq2E8mswI&feature=related (The Secret of OZ)

[-] 1 points by Middleaged (5140) 1 year ago

I plead ignorance. Looks like a big study ahead.

[-] 2 points by PublicCurrency (1387) 1 year ago

We all plead ignorance! I just read the Taibbi article posted at your link. It was great - thanks alot. Also, read "Griftopia." Taibbi is the best!

Ellen Brown has alot to say as well.

http://www.WebOfDebt.com

[-] 2 points by Middleaged (5140) 1 year ago

Yes, just listened to Bill Still and she is one his video (The Secret of OZ). http://www.youtube.com/watch?v=swkq2E8mswI&feature=related

[-] 2 points by shadz66 (18001) 1 year ago

Excellent 'forum-post'., further to which I append :

  • "“The Missing Billions, Savage Austerity Cuts and Corporate Tax Avoidance : Since emerging in October 2010, the UK Uncut campaigners have protested against tax avoidance in the UK and have worked to raise awareness about cuts to public services. They have also undertaken — and encouraged others to undertake, on a kind of free franchise basis — countless actions involving theatrical occupations of corporate outlets, and are now, as they put it, “extending their actions into the courts.”, by Andy Worthington : http://www.informationclearinghouse.info/article31679.htm .

fiat lux ...

[-] 3 points by Middleaged (5140) 1 year ago

Thanks. Quiet a piece.

[-] 1 points by SparkyJP (1646) from Westminster, MD 1 year ago

Matt Taibbi discusses this article and more in this interview with Bill Moyers.

June 22, 2012

Matt Taibbi and Yves Smith join Bill to discuss how the folly and corruption of both banks and government leaves deep wounds in our democracy.

http://billmoyers.com/segment/matt-taibbi-and-yves-smith-on-the-follies-of-big-banks-and-government/

[-] 2 points by Middleaged (5140) 1 year ago

I was just going to look for that! Thanks.

[-] 1 points by SparkyJP (1646) from Westminster, MD 1 year ago

Glad to, but to be honest, shadz beat me to it in a post above. Thank you for bringing this article to my attention.

[-] 1 points by atki4564 (1259) from Lake Placid, FL 1 year ago

True, they are "faceless financial executives" so create a new constitution to sideline them, as follows:

We the peoples, in order to secure Freedom and Justice for All, do enact this Constitution for Strategic International Systems LLC (or SIS LLC) as summarized in the following Business Operations Forecast:

The customer value mission of SIS LLC is (1) to organize all customer-investors into 3,000 investment squad sites of 16 friends (or virtual specialties), and related internet investment legislatures of 50,000 friends (or virtual towns), requiring (2) a $20 weekly capital contribution for 1 year (or $1,000) to (3) create your investment club bank of 50,000 friends (or physical town) -- that is, having $50 million in initial assets -- which (4) due to the operation of today’s fractional banking system becomes (5) $500 million in new annual business loans (or $10,000 in new annual individual loans) from yourself as a new bank officer to yourself as a new business officer who (6) takes 75% employee business control as business officer-investors and 25% customer business control as bank officer-investors of (7) your specific 12 businesses (or investments) in your new bank investment account wherein (8) your investor voting power equals (9) your 1 of 12 levels of experience in (10) your 1 of 12 sectors in 1 of 50 industries in 1 of 200 occupations in 1 of 3,000 specialities which (11) votes-upon your purchasing (or investment) orders as (12) proposed by your employee-elected chain of command.

This means you will have 75% employee business control over your workplace as business officers and, as bank officers, 25% customer business control over all 12 investments (or businesses) in your new bank investment account. In turn, with this 100% town-level business control of your 3,000 workplaces, you can decrease your 12 customer consumption expenses by 75% for services, vehicles, education, retail, food, construction, technology, manufacturing, wholesale, health, justice, and banking expenses; that is, over your first 12 years of SIS LLC membership using a 75% more effective and efficient town design, and related 3,000 workplace designs (herein). Furthermore, while creating your new town & workplace design as described by this constitution, you will replace today’s communist big businesses, and related big governments, with your new small investment club banks, and related small businesses (or investments), as proposed, financed, and patronized by your 3,000 investment squad sites of 16 friends (or virtual specialties) in your internet investment legislature of 50,000 friends (or virtual town).

Why? First, because today’s executive business income (mostly from bank or financial asset income) is 33% of all income which is a huge amount of upper 1% income to split among yourselves as new bank officers having 25% customer business control, right? Second, because today’s executive business wealth is 42% of all wealth which is a huge amount of upper 1% wealth to split among yourselves as new business officers having 75% employee business control; that is, only after becoming new bank officers (above) first, right?

For example, this means if you earn $12/hour today, then you will earn $36/hour tomorrow after adding (1) your old wage income, plus (2) your 33% (more and new) interest income as a new bank officer, plus (3) your 42% (more and new) dividend & gain income as a new business officer. Together, these 4 sources of wealth & income from your specific 12 businesses (or investments) will double your net worth every 6-12 years (until retirement); that is, from the compound interest decline of today's upper 1% executives whom you will replace as the new bank & business investor-officers. So, with this power, let’s end today’s communist big businesses, and related big governments, okay? How? By helping to operate your own Business Operations Forecast (above) at http://finance.groups.yahoo.com/group/StrategicInternationalSystems/ ; so help us help you, today!

[-] 1 points by Middleaged (5140) 1 year ago

I'm going to have to leave this up on my computer to read it when I'm not so tired. I almost know what you mean.

I think you mean it is a better plan that having a minimum 5% interest on all Individual Savings Accounts in the US.

[-] 1 points by brightonsage (4494) 1 year ago

Kind of funny that 15 bankers convicted so far. for this scam but none for the meltdown. I can't figure how much they actually stole, but with the settlements closing in on a $billion, I suspect it was a lot more. Out of $3.7 trillion, it sounds like most transactions were rigged.

Shouldn't there be hundreds of civil suits to follow?

[-] 3 points by Middleaged (5140) 1 year ago

Takes Money to File Lawsuits. Most US Citizens are deprived of the court system due to liabiltiy and cost. Mostly I mean if I had $110K Dollars - I still wouldn't have enough dough to feel comfortable filing a lawsuit against a big Wall Street Bank or any other big Entity either public or private.

Maybe I am Risk Averse. Maybe I'm unusual. But I can't see anyone I know suing the US Government or Suing a corporation with deep pockets and lawyers on staff.

I SAY it takes over $2 Million Dollars of Wealth to allow you to consider a Lawsuit against the US Government or a Corporation.

Therefore, Most US Citizens are deprived of the court system due to liabiltiy and cost.

[-] 2 points by brightonsage (4494) 1 year ago

In this case, you have mostly, municipalities and other government entities who had bond sales "arranged" by these guys so state Attorney's General would be filing suit on their behalf.

I sued a fortune 100 company on behalf of my start up company that they had bankrupted and got it done on a contingency. Cost about $1million.

But I agree with your point. It will be impossible to get it done on a contingency if the GOP gets their way and limits the loss of the defendants to $250,000, like in Texas.

[-] 2 points by Middleaged (5140) 1 year ago

Wow, good experience, but hate that you had to go through all that pain. You remind me of the video I was watching 'The Secret of OZ'. The bankers take averything away from the farmers and call them peasants or something. The prejudice of classism was very clear.

Unfortunely the ideas of the past are reborn to conservatives in new generations ...and they have no idea why they laugh at 'what they see are little people, or lazy people, or poor people'.

[-] 2 points by brightonsage (4494) 1 year ago

More pain than you realize. Took two years with no income. Won the jury decision. Judge would not allow damages for loss of future profits, only out of pocket costs already incurred. There is no appeal of his decision. I signed over the check to the attorneys. Officers and shareholders got $0.00. Those who were lifelong friends of the judge said he must have been bought. Oh, well. Life goes on.

[-] 1 points by Middleaged (5140) 1 year ago

I guess you were competition against them. It would be worse if they just made a decision to shut down your business just because you were on their turf. Hope that wasn't it. I just hate that people do this. AND I hate that some of them think it is okay or normal since it was part of business to kill competion.

[-] 1 points by brightonsage (4494) 1 year ago

No, they licensed us to use a technology that it turned out I had invented and they stole from my old company. So I knew it would work in this application but I invented another solution, that I owned and could sell to their competitors. To have exclusivity, they put us out of business so we couldn't sue them, when the stole it. I got it done anyway. Until the judge....

[-] 1 points by Middleaged (5140) 1 year ago

Sorry to hear. Yep, that is warped capitalism. regulatory capture, court capture, leveraging the courts with deep pockets, intellectual theft, racketeering, strongarm tactics, etc.... ugh.

[-] 1 points by brightonsage (4494) 1 year ago

But I have moved on. We have bigger fish to fry and little time to fry 'em.

[Removed]

[-] 1 points by nazihunter (670) 1 year ago

It all boils down to the Wild, Wild West free-for-all on Americans' pocketbooks. Can we stand it any longer? Will a peaceful demonstration in the park take care of this matter?

[-] 2 points by Middleaged (5140) 1 year ago

Yes, Money breeds contempt of voters in Washington DC. Contempt of those that don't have money to get into the Washington DC Lobby "Game".

Most US Citizens are deprived of the court system due to liabiltiy and cost. I'm guessing I would not sue the US Government or a Big Bank unless I have $2M Dollars or more in savings.

Let's get money out of the Government.

[-] 1 points by nazihunter (670) 1 year ago

You don't have to sue. You get people in your community to hold town hall meetings like the righties. Act angry. Act like you're gonna kill someone. They get away with. Get ripped about wasting our money on Eric Holder like Gangrene did on Clinton. Millions wasted while they collect fat checks and pensions. Demand that Republicans in the Congress and Senate get off their fully-paid government insurance and pay for it. Let them fight their way out of that contradiction. The list goes on and on....but lots of people are with you.

[-] 1 points by Middleaged (5140) 1 year ago

You got a point. Alex Jones gets away with a lot of stuff too. I know many people get upset about meetings for school millage (raising a tax for the school district) ... or at least they used to get upset and go to the meetings. It was never my issue and I didn't live in those places mostly.

[-] 1 points by brightonsage (4494) 1 year ago

Violence solves every problem for the victims.

[-] 1 points by nazihunter (670) 1 year ago

Unfortunate though it may be. But, it's always up to the other side how aggressive the measures should be. It's their choice. If someone attacked your home wielding an ax, what would you do? Ask for a timeout? And then when your family lies in pieces, who do you blame? The analogy is spot on. Your home is being robbed and your children are now at risk.

[-] 1 points by brightonsage (4494) 1 year ago

I guess this force field thingy must need new batteries?

On the heels of this scandal Barclay's just settled on the LIBOR rate fixing scandal for nearly a half a $billion. There will be another parade of settlements.

Jail terms under the RICO statute. That is what we need.

[-] 1 points by brightonsage (4494) 1 year ago

Great post. Thanks. I always enjoy the pain inflicted by Matt when he informs me of how I have been victimized.